The application for regulatory approval should not contain the words “We are launching a cryptocurrency platform”.
Are customers able to exchange crypto in exchange for fiat currency? Will the platform allow the transfer of virtual assets? The company will be able to control clients’ wallets and private keys? Are they administering a digital asset lending platform and issuing tokens, or overseeing a trading system?
These distinctions are crucial when applying for an crypto-license in Georgia as the type of products and services a business plans to provide will impact its regulatory requirements documents, controls, and capital requirements.
Georgia is a fantastic location to start fintech businesses, however to be able to access its controlled virtual asset market, you need more than just registering a company and creating a site.
Then, you need to define the service.
Businesses that provide virtual asset services to third-party clients as per the guidelines in PB Services must register with the National Bank of Georgia as Virtual Asset Service Providers.
This covers virtual asset transfer and exchange, the administration of trading platforms and the administration or custody of cryptocurrency. Importantly, the supplied legal information states that the custody concept is also applicable to administration of a client’s private account or key.
This is what makes the design of cryptocurrency-related products relevant to their legal status.
A founder interested in obtaining a crypto license in Georgia should therefore map the proposed customer journey before preparing the application. What happens when a user deposits assets? Who controls the account? Are assets traded or transferred? Which party authorizes the transaction?
It is important to be clear in your answers to clarify what the company will actually do.
Your Business Plan Needs to Describe a Real Company
A VASP application also needs more than an attractive pitch deck.
Based on the information given, according to the information provided, National Bank requires a detailed plan of operation that includes financial projections that cover at least three years. These include income, expense, as well as expansion expectations. The plan must also reflect that there is a real intention to run in Georgia.
This is a requirement that must be addressed in the earliest possible time.
A business model designed to be used by investors addresses concerns like how quickly the company’s growth rate can be accelerated. A business plan for an operation that is regulated must contain information about how the business will be managed safely.
Georgian applicants for a vasp license should not view the commercial model as though it was not related. Instead they should be able to connect them.
AML is not able to be added at the end
PB Services has described the preparation process as a major part of it is the controls against money laundering and terrorist financing.
The provided material warns that simply import of an AML policy from another country isn’t enough because Georgian laws must be integrated into the company’s structure.
It is also important to consider the operational systems. The business plan must show that the system is able to identify potential suspicious transactions as well as related transactions.
Compliance needs to be an aspect of product development. It is not recommended to build a platform before deciding how AML policies will be applied. This can lead to delay and unnecessary changes.
The services you select can Have an impact on your Capital
Knowing the business model in the earliest possible time is vital for a variety of reasons, not least the need for regulatory capital.
In accordance with the guidelines in the source material the transfer and exchange activities, including kiosks, require 150,000 GEL. Trading platform administration needs 350,000 GEL while other covered services require 250,000 GEL. When several services are provided the most appropriate threshold is the one to be used.
This is different from regular capital used for investment or operational purposes. A proof that the requested amount is actually funded must accompany the request. Additionally, the capital has to be maintained during the entire operation.
The founder who wishes to obtain a crypto-blockchain license in Georgia must therefore consider the regulatory capital in his budgeting before the rest has been completed.
Registration isn’t the end of compliance work
Approval isn’t the time where the compliance calendar goes away. It is a requirement that includes continuous obligations pertaining to risk management, cybersecurity and technological resilience. They also cover the retention of records, independent review of customer complaints and records retention.
For instance an independent auditor’s report regarding the risk-management framework has to be obtained within 12 months of the date of registration. Businesses must also follow the described rules regarding handling complaints. They are required to accept all complaints, whether they’re written, verbal or electronically, and review them within a one-month period, and provide data on complaints electronically to National Bank every month.
The details of these changes affect how serious applicants should approach licensing.
Imagine an Georgian VASP Application as the style of a controlled business.
It is vital that the organization’s structure along with the technology, AML controls and regulatory capital, as well as customer processes, are in harmony.
Georgia offers opportunities to businesses in the field of fintech and crypto and the regulatory framework offers an open path to entering the market. However, asking about the speed at which you can apply for a license isn’t the best approach to begin.
You should be able to clearly describe what your crypto-business’s goals are and prove that you’re prepared to comply with Georgia’s rules.
